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Sequestration treadmill picking up steam across DoD

Jared Serbu, DoD reporter, Federal News Radio

Barring an 11th-hour budget agreement that's eluded the legislative and executive branches for nearly a year-and-a-half, sequestration officially will take place Friday, and the military departments will take additional steps to cut back on spending to try to cope with a sudden slice to each of their programs.

But while the punitive spending cutbacks, which were never supposed to happen, will occur immediately and automatically on paper, their impacts to the Defense Department will not be obvious to the public or to lawmakers for weeks or months, long after even the next in a series of pre-arranged budget crises: the expiration of the short-term continuing resolution which funds the federal government through Mar. 27.

"It's not going to be a big, explosive event on the first of March," said Maj. Gen. Karen Dyson, the director of the Army's budget office. "It's more like getting on a treadmill that continues to pick up steam. We've been on that treadmill since December when we started planning for this."

When the Office of Management and Budget issues its sequestration order to federal agencies, the military will begin to take additional actions to conserve cash for the rest of the year, particularly in its operation and maintenance accounts. The steps include preparation for wide-ranging civilian furloughs, more curtailment of military training and a close examination of contracts for possible terminations or modifications.

But for most of those steps, the impacts will show up this spring and summer as lagging indicators of steps the military already will have taken.

"It's going to really start to impact most widely by April," Dyson said. "That's when we're looking at the furlough of our civilian workforce, which we very much don't want to happen. But by about Memorial Day, you'll see that workforce furloughed, and we'll have a pretty good sense of which training cannot happen for soldiers."

Huge cuts to O&M accounts expected

Training and civilian salaries are just two of the areas covered by the Army's operation and maintenance (O&M) accounts. Those funding lines are particularly vulnerable to damage by sequestration, because the dollars are spent in the same year they're appropriated, unlike large weapons programs that can continue to carry on if they were funded with contracts from prior years.

Because of a perfect storm of budget pressure on those O&M funding lines in 2013, including sequestration, a stopgap budget that was copied and pasted by Congress from the year before and now is mismatched with real-time needs, and unexpected costs in Afghanistan, the Army will have $18 billion less in O&M budget authority by the end of this year than it expected when 2013 started in October.

The service intends to protect the war effort in Afghanistan from cuts and will endeavor to do the same with wounded warrior programs and its most critical family and soldier programs, officials said. That leaves only about half the O&M budget open for the reductions that sequestration and a full-year continuing resolution would require.

"So when you hear that sequestration impacts everyone evenly across the budget, that's not true when it comes to our operation and maintenance account," Dyson said. "The compounding effect of this is really about 52 percent against our unprotected amounts for operation and maintenance. And that's if we spread it across the entire year. But we're going to be starting this on Friday, which means we only have seven months left to execute that reduction, and we only have $20 billion left in our unprotected accounts. So now we're taking an $18 billion reduction against $20 billion. This is why this is a devastating environment to operate within."

With only $1 billion-to-$2 billion O&M dollars to spread around for the remainder of the year, the Army will start making additional cutbacks when it gets the sequestration order.

Most training, repairs on chopping block

For example, the Army will cut back training for approximately 78 percent of all soldiers, and only the next group set to depart for Afghanistan will have their training fully funded.

Additionally, the service will cut funding for domestic military facilities immediately by 30 percent for the remainder of the year, said Brig. Gen. Curt Rauhut, the director of resource management for the Army's Installation Management Command, which manages stateside bases. He said the Army doesn't believe it will be able to fully pay for even the most critical safety of life programs on installations, and it will be able to support only 37 percent of the facility sustainment and repairs needed.